SCSD No. 1’s newly opened CNG station subject of suit

Posted: Wednesday, Nov 21st, 2012BY: Megan Neher

PINEDALE – Just weeks after it opened and before a date for a grand opening had been set, Sublette County School District (SCSD) No. 1 finds its compressed natural gas (CNG) fueling station under fire from the Wyoming Petroleum Marketers Association (WPMA), which is suing SCSD No. 1 and the Wyoming Department of Transportation (WYDOT), the government agency that issued the retail permit to the school district.

At the November school board meeting, Business and Finance Manager Vern McAdams told the board the retail side of the station had sold 550 gas-gallon equivalents in the previous month. This was on top of what the district uses to fuel its two CNG busses. It is the only retail location for CNG in the area.

While the WPMA recognizes the possible role for CNG in the future, as well as the infrastructure costs to build a station, Mark Larson, the group’s executive director, said he and his members feel a government entity funded by taxpayer dollars should not compete with what Larson said should be the purview of private businesses.

In a WPMA release, the group stated its goal of preventing the school from using “taxpayer facilities and resources to sell CNG at retail to the public until the legislature specifically authorizes the school district to directly compete with private enterprise.”

The group is suing WYDOT, questioning its authority to issue a retail permit to the school, but beyond the legal argument, Larson noted the Wyoming legislature has repeatedly voted down bills that would have given WYDOT and schools the authority to sell CNG at a retail level.

“Clearly the legislature had no desire to allow them to sell retail,” Larson said.

Tom Loftin, WYDOT’s support services administrator, said the state agency issued the permit to the district as it issues all permits to sellers of fuel.

“WYDOT monitors the sales of and collects the tax on fuel,” Loftin said. “Anytime you sell gas, diesel or, in this case, CNG, by state statute, the department reviews the application, makes sure the applicant meets all the requirements and issues a license for the operation.”

There was no legal reason to deny the district its permit, so WYDOT approved it.

After months of construction and around four weeks of being in operation, the marketers association filed suit for a declaratory judgment, asking for ruling to prevent the district from continued sales.

“We understand the desire for the community to move into CNG, and we endorse the school using it for its own equipment, but when you start down the slippery slope of selling it in the retail market, we have a problem we feel needs to be addressed,” Larson said.

The cost of building a CNG station is large, and Larson argued having a subsidized station funded in part by taxpayer dollars would preclude any other entrepreneur from establishing a competing station.

“The major issue with CNG is the ‘chicken and egg’ conundrum: costly infrastructure is often a barrier because there are not enough natural gas vehicles to justify the infrastructure investment,” the WPMA release stated.

While the district’s operation may get around this problem, Larson said it would not only hurt consumers by reducing competition, it may also hurt the district in the long run.

“[The district] could be missing out on the property taxes that would come from such a business,” he said, noting this could mean more revenue for the district in the long run than the CNG station.

Any money gained from increased property value or the collection of additional taxes would only be felt in the recreation mill and the BOCES (Board of Cooperative Education Services) mill, not in the operations of the school. The state funding system ensures all districts are funded equitably based on a formula regardless of how many taxes are collected.

WYDOT has yet to issue an official response regarding the suit. Loftin said that would come from the Attorney General’s office in due time. School District Superintendent Jay Harnack also declined to comment on the suit, citing the district’s involvement in ongoing litigation.

“The best intentions of the school district to convert school buses to run on CNG do not justify the school district inserting itself into the private market in a manner that defeats the ability of private businesses to aggregate enough demand to justify the upfront investment in the costly infrastructure,” the WPMA concluded.